Titan Pharmaceuticals: Finally Reaching Its Potential

Written by Vinny Cassano

Friday, 20 November 2009 00:00

It was a quick rise to the $2.40 level for shares of Titan Pharmaceuticals (OTC:TTNP), as it finally looks like the stock is starting to trade towards its potential.

With the heavyweight Novartis (NYSE:NVS) set to commercially launch Fanapt early next year, the schizophrenia drug could quickly gain a foothold in a huge market ($14 billion) that has the lowest selling product raking in over $1 billion in annual sales.

As both long and short term followers of Titan Pharmaceuticals well know, Titan will receive royalties of 8% on Fanapt sales up to $200 million and 10% on all sales thereafter; royalty rates that barely justify the current market cap of the company alone when considering the fact that Novartis, with their push and influence, could make Fanapt an instance force in the schizophrenia market.

And then there is Probuphine. For those new to TTNP, Titan recently received a grant from the NIH to fund a Phase III trial for Probuphine to confirm the drug's effectiveness in treating Opioid addiction.

Probuphine is also being tested in Phase II trials for the treatment of chronic pain.

While I have no doubt that TTNP continues to hold significant potential for the future, I sold a few shares into last week's spike to $2.30 in order to free up some cash and move it around a bit.

With Fanapt ready to launch in a couple of months, the next events that could/should move the TTNP stock price are:

Buyout news. I continue to believe that this is a possibility.
Fanapt sales updates by the end of 1Q 2010.
Probuphine pipeline updates. Shouldn't come until next year.
Partner for probuphine. Could come at anytime, or Titan could go it alone for the time being, using grant money and/or Fanapt royalties.
News of a TTNP move to a major exchange, although this only becomes a possibility if no buyout occurs, in my opinion.

In the event that Titan is not acquired, then a stock sale could become a possibility in order for the company to raise funds. If that were to be the case then I would expect it soon after the recent runup.

However, with a Fanapt revenue stream imminent and Probuphine looking more promising with every update, the days of Titan existing solely as a speculative company are dwindling.

Much of this is a rehash for long term readers, and while Titan still has some nice potential moving forward, it's not a bad time for those still holding sub-five cent shares to realize some profits, spread it around, buy wifey a new pair of shoes and take a vacation.

Of course, this is all just my opinion. Do your own DD.

Disclosure: Vinny Cassano is Long TTNP.

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